OUTLOOK

What high performers in public transportation do well

Accenture research into a dozen international cities uncovers the characteristics of high performance in public transportation.

Introduction

These are challenging times for the public transportation industry. Customers have become more demanding and discriminating in recent years, increasingly expecting a variety of travel options as well as a better travel experience in general. At the same time, fuel costs are rising and subsidies are falling—a combination that makes for a tough business environment.

What steps are transport providers taking to address these challenges and improve their service as well as their financial picture? To shed light on the characteristics of high performance in public transportation, Accenture investigated the capabilities and strategies of representative cities on four continents.

In part, the answer for providers is to continue to drive better performance in traditional areas: improving punctuality and safety, raising the overall quality of service, increasing capacity and keeping costs under control. Accenture research found, however, that high performers in public transportation are looking to spread their investments between those basic operational capabilities and newer strategies focused on goals such as improving customer centricity, increasing value for money and driving more sustainable development.

These newer strategies can be categorized into three imperatives: maximize demand for services; optimize capacity; and rethink business models to improve collaboration and revenue generation through interaction across the broader transportation ecosystem.

Maximizing demand

High performers in public transportation are looking to increase demand for services by understanding their customers better and improving the overall transportation experience. For example, cities are using innovative mobile applications, such as location-based apps, to improve the availability and relevance of information.

Take MyTransport Singapore. This app uses geopositioning to provide passengers with information not only about transport services but also about nearby entertainment options and other services such as teller machines. In Paris and London, passengers can use Flashcode-compatible smartphones to take a picture of the 2D bar code at their stop to obtain real-time information about the next bus or tram arrival. And then there’s WiFi: The London Underground now offers wireless Internet service at more than 100 tube stations. Providers are also increasingly using social media platforms. The Transport for London agency, for example, has established Twitter handles for its tube lines to push timely information to passengers about service.

Electronic payment systems, or “e-purses,” are also being used to improve the customer experience not only by making it easier to purchase transport services but to improve multimodality.

Rechargeable e-purse public transit cards are increasingly accepted by suburban trains, as well as by parking and taxi providers. In Seoul and Tokyo, rechargeable smart cards can be used to pay for bus, subway and some taxi fares, as well as in some parking lots and stores in and around the city.

In the future, providers looking to achieve and sustain high performance will need to improve their ability to use both social media and passenger usage data to shape services and pricing. Public transportation agencies in general are not yet using social platforms for two-way communications, to understand customer wants and needs more deeply, or for recruiting and marketing purposes.

Analysis of usage data will enable providers to understand the individual movements of passengers—the ultimate goal in generating insights from data mining. Singapore and Seoul are making strides in that direction by using travel data to optimize capacity. Some providers intend to use passenger data to suggest seating, transport modes and overall journey plans. In the future, they will also be able to set prices dynamically to reflect preferences and actively manage demand—a move beyond the easier step of setting prices differently for peak and offpeak services.

Optimizing capacity

Cities including São Paulo and Oslo are improving capacity and reducing operating costs by rationalizing and optimizing routes—eliminating parallel services and offering routes and modes based on an analysis of actual usage and trends.

Other cities such as Seoul are working creatively to eliminate redundancy of services by using trunk-and-feeder routes, connecting suburban feeders to a consolidated inner-city main or trunk system. This has helped the city optimize its bus fare grid based on route demand—increasing ridership while reducing cost and congestion. Another attractive feature of this model is that it enables cities to test demand on feeder routes and shape the future distribution of the transportation network.

Innovative approaches to improving overall efficiency are another feature of high-performance public transportation. Green initiatives are one part of the picture. Oslo, for example, is testing emission-free hydrogen buses.

Tokyo has replaced about 88 percent of its trains with newer models that consume only about three-fourths of the energy of traditional trains. The London Underground is using innovative regenerative braking technology to effectively feed the electric power used to slow trains back into the system, resulting in 25 percent energy savings.

Analytics technologies and applications increasingly will be a key to high performance. For example, as part of its Smart City Action Plan 2011-2013, Shanghai is developing an intelligent transportation management system. It will integrate traffic data from different management systems and enable in-depth data mining to improve decision making. Transport for London is analyzing customer travel data provided by electronic ticketing cards to deliver insights into consumer preferences and trends. Customer surveys are also used to market to different customer segments.

Rethinking business models

In many cases, cost control alone is not enough to release the cash flow necessary to invest adequately in key areas for improving demand and capacity. New business models and modes of collaboration are increasingly driving high performance in public transportation.

Diversifying revenue sources beyond the fare model is one important strategy. For example, Shanghai Metro has introduced virtual supermarkets in 70 of its metro stations. Large LED screens advertise products; goods can then be purchased electronically by shoppers and are delivered within 48 hours.

Providing consultancy services is another opportunity, one that Singapore is seizing. The city’s metro operator went public in 2000, forming SMRT—a multimodal transport providing engineering consultancy as well as operations, maintenance and project management services—which now works with other operators around the world.

More collaborative models are also important. Transit operators increasingly are involved in city planning, enabling a more holistic view of the implications of transportation beyond just providing transit services. In Singapore, the transportation authority oversees all forms of mobility, from buses to private cars and also has a voice in city development, weighing in on zoning for commercial and residential areas. Amsterdam’s transportation authority collaborates with city officials to help define regional housing policy.

Through this improved collaboration, transportation issues can be considered early in the planning process and then again over time. In this way, municipal infrastructures can be designed to better support the evolution of cities and the needs of citizens.

Conclusion

Budget pressures, changing customer behaviors, evolving city needs and technology change are reshaping the landscape for public transportation providers. Achieving high performance will depend on going beyond the basics of reducing costs, increasing service quality and improving on-time performance. It will require innovative approaches to improving demand and optimizing capacity, and business models more appropriate to the changing needs of the 21st century.

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